That was the conclusion of a new analysis by Towers Watson that focused on defined contribution (DC) plans and hybrid pension plans, typically cash balance plans. According to the analysis, 58 companies in the Fortune 100 offer only a DC plan to new hires, compared with 55 companies at the end of last year and 51 companies at the end of 2008.
The most recent findings include three companies that announced this year that they will switch from a hybrid plan to a DC-only plan and three companies that are converting from a traditional DB to a hybrid plan. Meanwhile, 17 companies continue to offer a traditional DB plan, a decline from 20 at the end of last year and 24 at the end of 2008.
Twenty-five of the 42 companies with DB plans offer hybrids such as cash balance plans.
“The movement toward account-based plans appears to be steady and strong, as companies shift away from traditional pensions,” said Kevin Wagner, senior retirement consultant at Towers Watson. “While most of the shifting has been toward 401(k) plans, we are seeing employer interest in cash balance plans too, as the provisions of the Pension Protection Act, which creates a more friendly environment for these plans, begin to take effect.”
More information is at towerswatson.com.
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